CREDIT : Disappointing Treasury Sale Sinks Bond Prices

NEW YORK — Bond prices fell Wednesday after the second leg of the government's giant quarterly auction failed to attract a substantial number of foreign buyers.

The Treasury's bellwether 30-year issue, which on Tuesday gained about 1 points, fell 7/8 point, or $8.75 per $1,000 face amount. Its yield rose to 8.39% from 8.32% late Tuesday.

Bond prices rose initially in continuation of Tuesday's sharp advance but then deteriorated throughout the day. Investors moved to take profits "once it became apparent that the demand (for new issues) was not overpowering by the Japanese," said a senior executive at Nikko Securities Co. International who asked not to be identified.

Analysts also noted that traders would be reluctant to take positions ahead of Labor Department's unemployment report, due Friday.

Traders said a government report showing December factory orders rising 2.5% was expected and had little effect on bond prices.

The federal funds rate, the interest on overnight loans between banks, traded at 6.50%, down from 6.625% late Tuesday.